On November 10, 2011, Judge Beryl A. Howell of the District Court for the District of Columbia handed the Antitrust Division of the Department of Justice (DOJ) a significant victory when she enjoined the proposed merger of H&R Block and 2SS Holdings, Inc. (TaxACT). The case, United States v. H&R Block, Inc., No. 11-cv-00948, is the first time that DOJ has gone to trial since 2004, when it failed to block Oracle’s acquisition of PeopleSoft, and is the first victory for DOJ in a tried merger case since 2003. It is also the first merger case litigated by DOJ since FTC’s and DOJ’s new Horizontal Merger Guidelines that were issued in 2010. The court granted a permanent injunction on October 31 but only released its memorandum opinion after the parties redacted confidential business information. The opinion is available for download here.

H&R Block had planned to combine TaxACT with its own digital do-it yourself (DDIY) tax preparation business, while still offering both products on the market. DOJ argued that the proposed deal would substantially lessen competition in the growing U.S. DDIY tax preparation software market by combining the second- and third- argest providers of DDIY tax preparation products. H&R Block countered that, among other things, the likelihood of expansion by existing DDIY companies other than Intuit, H&R Block and TaxACT would offset any potential anticompetitive effects from the merger. The court dismissed H&R Block’s arguments, finding that, though 18 companies offer DDIY tax preparation services, “most of these companies are very small-time operators.” DOJ lawyers argued that, of these companies, the closest two competitors “are not in the same league as the ‘Big 3.’”